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House prices ‘could fall’, Reserve Bank governor warns

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Here is another interesting Wellington real estate related news article that we thought may provide you with helpful information.

ALDEN WILLIAMS/STUFF

Economists at Westpac said recent weakness in the housing market could go on for some months

Reserve Bank governor Adrian Orr has warned there is a risk of a correction to house prices, with asset prices unlikely to return to a “steady state” after the recent rise.

In an interview with Q&A broadcast on Sunday evening, the Reserve Bank governor said there were “big risks” to the central bank’s forecasts that house price increases would continue but at a rate of around 1 per cent.

The Reserve Bank remained concerned that if it removed loan to value ratios, there was a risk that lending would increase, meaning prices would rise faster than expected.

“On the downside risk, asset prices very rarely smoothly transition back to some steady state level.”

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